As I wrote last week, the forthcoming election season promises little in the way of good news for the US Republican Party. Chances are, once the dust has settled, they will be looking for a new direction to resurrect their tarnished brand. They could go populist, backing greater government intervention in the economy and focussing even more on ' traditional values' and social issues. They might go centrist, adopting something like David Cameron's liberal conservatism. Or they could go back to their roots, re-embracing the principles of liberty and small government.

Obvious personal preferences aside, there is a good electoral case for them pursuing the third strategy. According to Cato's polling research, the 'libertarian vote' represents between 10 and 20 percent of American voters – a group that is both large enough to swing elections and which has shifted away from Republicans and towards Democrats in recent years. Indeed, when you use the loosest definition, this 'libertarian vote' is even larger: some 44% of voters would describe themselves as "fiscally conservative and socially liberal".

Given the federal nature of US politics, any new movement in the Republican Party is likely to start in the states – which is why another Cato report, published this week, is so interesting. The Fiscal Policy Report Card on America's Governors ranks state governors on their tax, spending and borrowing records, giving them grades ranging from A to F. Two Republican governors got A grades: Charlie Crist of Florida, and Mark Sanford of South Carolina (who once brought live pigs into the state legislature in protest at pork-barrel spending). Both men were mentioned as potential vice-presidential candidates in 2008, and both may be ones to watch for 2012.